Bankruptcy lawyers are often asked if active duty military may file for bankruptcy. The answer is yes.

There are a lot of people who believe that active duty military personnel are not allowed to file for bankruptcy relief. “While military personnel are held to a higher standard of conduct than regular citizens, they do not have to give up the right to declare bankruptcy,” said Kevin Ahrenholz, an Iowa bankruptcy lawyer.

Even dedicated military personnel may run out of money before they have come to the end of the month, and if this continues for a sustained period of time, the individual may need to consider filing for bankruptcy protection. It does not matter if they are in the military at the time they file, and it does not matter what Chapter of bankruptcy they elect to file. They have the same rights as all U.S. citizens when it comes to declaring bankruptcy.

Filing for bankruptcy while on active duty may have other consequences for members of the Armed Forces, such as a negative effect on security clearance and promotions. However, they are still entitled to file and have legal protection accorded to them if their duties get in the way of attending bankruptcy court hearings.

To file for bankruptcy, the service member needs to determine the appropriate state in which to file their petitoin. Federal law mandates they file their bankruptcy in the state where they have lived for the greater part of the six months prior to filing. “Since military personnel are frequently transferred, they need to check the bankruptcy filing requirements of where they currently live,” said Ahrenholz.

Military personnel must also get credit counseling within the six month period before they file, and the Department of Justice has a list of counselors on its website. While the counselors do not get involved with the bankruptcy case, they will outline the process and answer any questions. The next step is to determine which Chapter to file. The choices for personal bankruptcy are either Chapter 7 or Chapter 13. The Chapter is dependent on the size of the debtor’s household and whether his or her income falls above or below the median average income for that size of household in his or her state of residency.

One of the questions that bankruptcy attorneys often get asked is whether the debtor is allowed to withdraw from bankruptcy proceedings. Perhaps you have already started the bankruptcy filing process by consulting an experienced Iowa bankruptcy attorney who has assisted you with filling out all the right documentation, and you’ve paid the fees and you are moving forward.

The next step is advising your creditors that you have filed for bankruptcy, and perhaps meeting with them and attending a credit counseling session. You are eventually heading to a U.S. Bankruptcy Court hearing (Meeting of Creditors), and your Iowa bankruptcy lawyer advises you that you will be through the process shortly. Any second thoughts you might have had about taking this route have long since vanished. You still believe filing for bankruptcy was the only thing you could have done to get out from under your overwhelming debt load.

Then, before you get to your hearing, you get a phone call or a letter advising you that you have just come into some money, perhaps through inheritance or the lottery. Things like that do happen, although rarely. If you suddenly and unexpectedly come into money, you are allowed to stop the bankruptcy process in its tracks. However, you are still responsible for paying off your creditors. Once you have done that, the information that you gave to your lawyer that was then once entered into the system is purged. You will not have a record of filing for bankruptcy.

While winning the lottery might seem like a pipe dream, at least you know you do have the opportunity to withdraw from a bankruptcy proceeding should the circumstance arise.

It is possible for individuals and businesses to avoid being forced into involuntary bankruptcy.

The more debt an individual or company incurs, the higher the risk becomes that creditors will file bankruptcy against them. This is referred to as involuntary bankruptcy, and in some cases, it may be justified. In other cases, it is necessary for the debtor to defend against involuntary bankruptcy petitions in order to avoid surrendering assets or being forced to sell them.

“Individuals or businesses who find themselves in receipt of an involuntary bankruptcy petition need to reach out to a qualified lawyer for help,” said Kevin Ahrenholz, an Iowa bankruptcy attorney. If an individual or company is served with an involuntary bankruptcy petition, one of the first things that individual or company must do, aside from hiring a reputable bankruptcy lawyer, is find every record on file relating to paychecks, monthly bills, loans, mortgages and lines of credit. These documents are required to prove the amount actually owed to each creditor, versus what may be stated in an involuntary bankruptcy petition by a creditor. It is also helpful to provide a complete overview of net income and expenses, and then break down each month’s financial activity. Bank statements can also be used as evidence of past payments to creditors. The idea is to demonstrate to the court that the debtor’s financial picture is improving. If it can be proved that the debtor’s financial liabilities are being paid, and he or she is making an effort to pay off debts owed, this is often enough to defeat an involuntary bankruptcy petition. If a debtor is able to prove that their debt is less than $10,000, this too may – in most states – defeat an involuntary petition.

Ahrenholz stated that the debtor has 20 days within which to file any complaints that he or she has against any creditor who has filed an involuntary bankruptcy petition against him or her.. When an objection is filed, the matter most often ends up in court. Once in court, the debtor can attempt to prove that the creditor merely filed the involuntary bankruptcy in order to gain favor over other creditors. The court may dismiss the petition, noting that the point of bankruptcy is to distribute assets evenly among all creditors and not just to select and prefer a few. In the event that the debtor is unable to convince the court that the bankruptcy is unnecessary, the best way for the debtor to recover a position of control is for the debtor to work towards converting the case into a Chapter 13 bankruptcy.

If you are responsible for paying spousal support, filing bankruptcy will not negate that obligation.

You just found out that your spouse has filed for a divorce and you are in a panic. Perhaps at some point you made the decision to actually stop paying on your debts because you just could not keep up, and being served a divorce petition was the last straw. You think now it might be time to file bankruptcy, as you do not have the money to pay support. You also need to file some kind of response to the divorce action. Before you make any kind of decision relating to your divorce and/or filing for bankruptcy, consult with an experienced Iowa bankruptcy lawyer. If you make the wrong move now, you could find yourself with legal difficulties.

What considerations are there with respect to divorce and bankruptcy? Before the Bankruptcy Act of 2004, it was possible to discharge debts that came about as a result of divorce. Since lawmakers considered this to be a loophole, amendments were made to the Act to close it, which means you may no longer discharge any financial obligations that are the result of a divorce, including spousal and child support.

Your main consideration should be whether you are eligible to file for bankruptcy protection. The fact that you are facing a divorce is irrelevant to the issue of filing bankruptcy. However, in order to make the most informed decision about how best to proceed and whether to file Chapter 7 or Chapter 13 bankruptcy, it is imperative that you discuss your situation with a qualified Iowa bankruptcy lawyer.

Filing for bankruptcy is stressful enough without also facing divorce at the same time. This is when you need to services of a skilled Iowa bankruptcy lawyer to help you get through the maze of rules, regulations, credit counseling, and paperwork. If you attempt to file bankruptcy on your own without legal counsel, you may be wasting your time and money and ultimately find yourself at risk having of your bankruptcy petition dismissed. Hiring a knowledgeable bankruptcy attorney is the best investment you will ever make.